look at the turnaround in the japanese yen. we saw a sudden weakening, it was strengthening earlier today. now the japanese yen is weakening versus the dollar. the dollar gaining. overall the dollar is down against most of its tears today -- peers today. everyone is wondering if we will see a fed rate hike come september. we folks are wondering will work what we see it start as soon as this month? the fat the dollar is weakening, many feel the china data means they cannot go so quickly. dollar up by 0.3%. oil also trading lower. some of the the to six regarding chinese -- some of the statistics regarding oil are surprising. slowing demand-- for fuel really affecting wti. copper managing to trade higher. yesterday it got a pop from the fact that glencore will be reducing its output in africa. it is all about insurance. the japanese company i do not amlin. amlin yet to open, but we are expecting it to search. byy are being offered insurance, 3.5 billion pounds. we would like to see them search at the open, but look out for competitors. the consolidation is double where we were this time last year. because of the pricing pressure we are seeing getting hedge funds in on the action as well. look at the insurance factor up 0.5%. getting some more details on the structure of their deal. they come out on top, paddy power. it will be the biggest traded company in gaming in the world. power.ed by paddy they're not getting the nice little dividend that paddy power well. is the cost of coffee and the loads of brands that this company owns and not doing as well as had been hoped today. three minutes into the session, the ftse 100 into the green. i will bring you the opening price for amlin in a moment. a 36% and him pay for. to tradek expecting near that premium. ahn issecond half, shery there in hong kong to break it down. shery ahn: it finally happened again. chinese stocks surging in late afternoon trading. there has been speculation that the authorities would prop our markets. we have seen these late afternoon surges. from the lowest point to the highest point, this is a surge of more than 5%. all of this despite week trade data, having to growth in concerns and export decline. imports frank 14%. k 14%.orts shran those who did not see the upsurge after the shanghai composite rally, the nikkei erasing all of this year's gains. 2.4% in the morning session and falling to the lowest level since february. we are seeing asian shares plunging still and declining and extending those weeks of consecutive losses. we have some gains in the session. -- asf rising 200. after a producer made a multimillion dollar takeover bid. stocks in new zealand rallying 7/10 of a percent, because we expected to rally 2.5% when it meets later on thursday. jon: thank you for breaking down market moves in asia. the chinese data drag worsening in the month of august. exports down by more than 6%. down by more than 14%. let's get to beijing where we are joined by the bloomberg intelligence chiefs -- chief asia economist and the managing director at how hong. break down the importance of both of these figures today. exportsplunging and down, which would you pick as the more concerning data point. >> neither of them are particularly positive. exports are shrinking. what that speaks to is that fading international competitiveness. the export products not standing up in terms of the price. if you look at the import numbers, that overstates the weakness. the prices of oil, iron ore and lots of the big commodities that china has been purchasing are dropping. that has a negative impact on the headline import number. even so, if you start to see past that process, the purchases of iron ore and copper are also starting to drop below trend. we get acally, when bad data point, we talk about the policy response. you have to say that policy measures have not been exhaustive given where rates are right now. reached the point of diminishing returns as far as what the government and pboc can do next? >> i think one of the puzzles in 2015 has been how slow the government stimulus has been to gain traction. we have seen several moves on interest rates, moves on the reserve requirement ratio, substantial fiscal stimulus. none of this has started to prop up growth as aggressively as we might hope. even so, i think that one of the reasons why pessimism on the chinese economy is overdone is government china retains enormous policy space. that is a contrast to the western economies where interest rates are on the zero bound in the room for fiscal space is exhausted. china can still run a more aggressive fiscal stimulus. opened thethey have possibility of the yuan depreciating as well. weak butmbers are china still has significant room to do so been about it. jon: thank you for breaking that down. i what to bring you into the conversation. when you look into the trade data, what we used to get good traded up we would say, things must be bad, that can't be right. when we get bad data, we say things must be really bad. when you look at the trade data from china, did it tell you anything you don't already know? everybody has been looking for weak trade data. the weakening currency effect on export growth has not come in for the month of august. the currency continues to focusing a little bit on export growth. balance isade slightly larger than expected. so that will translate to a larger than expected trade balance. so if your is any surprise -- initially that was the reaction in the first half of training and then we saw this phantom bounce, the invisible hand guiding stocks higher. that tells me that this process has not been complete and if that is intervention than someone feels the need to intervene. would that be your read as well? >> if you look at the biggest mover in the afternoon session it was the banks. some of the larger brokers and insurance companies. are largely controlled controlled by the national team. so every day you would see some buying from the national team into the market which helped support the market into the clothing. china, thet that in market trades on a three plus one basis there it they tend to invite some sort of pressure on the road. market has been substantially on its own. it makes it very difficult to trade. what would make you a buyer of chinese equities at this point? >> if it could be cheaper. much of the bad news has been priced in and also the weakening has been priced in. it will improve the investment outlook on the investment market. the reserve data, 90 $4 billion spent in a month to support the currency. how do you support those moves with the plunging currency as well? >> i think that after the , the regulators probably got surprised by how negative the chinese market was. we have been popping up the chinese share in spite of weakening market depreciation. we immediately fear a substantial weakening in the overseas market. that is telling me that the market is expecting a depreciation while the regulators are probably a little bit surprised by the reaction in china. i think we could depreciate again. , youbly by five to 10% would help out export growth. cuts in rrr cuts. so, if things keep going this rememberer that -- that we lost about 100 million u.s. dollars in forex reserve. the depreciation really happened after the 11th of august. 2.5 weeks of depreciation and we already lost that much forex reserve. if we have a strong r and b that will put further pressure on the forex reserve management. jon: we will have to leave it there. discussioneep the where we left it. .elcome to the show, bill have we got a handle on the fx reserves deco -- reserves? miserable facts and figures and than the market goes up. that makes perfect sense. we have to look at the whole picture in china. some very poor figures coming up. we heard that the bank of china was saying at the weekend, after the g 20 meeting that they are targeting 7% growth. have an economy that suffered a property bubble. think it is discussed often enough. you have to wonder, how is china going to get through this transition phase to bring a consumer economy without more disappointment on the growth side. that has massive applications for everybody else. in the last few days people have been downplaying the effect of slowdown in chinese demand, adding aggregate demand across the economy. look at some of the investment banks at 0.2% or 0.1% effect on the u.s., but it is clear that the reason the global economy is in a downshift mode is because of concerns raised over china. to get that in your head, you need to look at china. and you look at china and you say there is no way these guys will keep 7% growth. jon: in 2012 we were not talking about china, but europe. the consensus view is that it is an ugly place and bad things would happen. and china, we are not quite at the point of 2012 in europe, but are we underestimate the positive response from chinese policymakers in the same way a lot of people did in 2012 for europe? >> i think that is a fair point. one of the critical points is that at some stage china does reach a balance. we know and have always suspected that chinese numbers are somewhat massaged. to put it mildly. i think people will take a clear view and they will look for the right time to get back in. then the problem is when do you dive into an economy that everyone is reassessing in terms of the way it operates to up until now, everyone has been very positive about the experience of the bank of china, the expertise of chinese regulators and suddenly, that confidence has been quite heavily shaken by the last three months and the last two in particular. as a result i think it will be more difficult for people to persuade themselves to reengage at some stage. it is clearly a problem that will be magnified by the crisis we are going to have went dollar rates hike. that is your question for how big are china's reserves. i think it is not a simple question of victor moments to jump back into it -- of pick your moments to jump back into china. it is about, am i going to jump back in? taking interview what you have learned of their economy. jon: contraction revised. japan's economy slowed less than estimated. we will bring the lest bad news from the world's third-largest economy. then germany will present a draft of their 2016 spending plan. your problem. we will tell you why. bank thinks the west should not be too concerned about the west's slowdown. the chinese insurer goes after amblin. a 36% premium. share -- 6.70 per share. we are back in two true. ♪ jon: welcome back. thelatest gdp data shows strength grew less than expected. , is this a positive surprise? what was behind it? >> i think that it just speaks to the dire state of the global economy when it is considered an upside surprise when the japanese economy is a bit less bad in the second quarter. the important thing to keep in mind is usually these gdp reports are ancient history of the time they come out but this time especially because it happened before stock markets around the world crashed. the nikkei today has lost its gains for the year so that has not yet filtered into the japanese consumer or businesses. you have to look at these numbers and say how about the third quarter? veryi want to move it on quickly and go to caroline hyde. corporate japan opening its wallet again, what is the story? caroline: the insurance splashing the cash. amblin shares are rising to a record high this morning. belooks like they will splashing some 3.5 billion pounds. what does that mean in terms of premium? 36%. this is a lloyds of london insurer being snapped up. they say it will accelerate the international business. they wanted to globally expand because of the slowdown in asia. let's see what is really behind the steel. why the international expansion and why the flurry of deals? it is more than double what we saw last year. the trend is phenomenal. asian insurers are buying abroad getting international and getting into the likes of the u.k. market. we have seen not one but two in the last few months. both have bought out u.s. companies. going for the expansion abroad with an influx into the reassurance sector is suddenly driving down the prices that can be charged for reinsurance and insurance. that is white forcing the likes -- that is why you are seeing the likes of amblin being stepped up. just think, x l recently getting it with capping group. this is a trend that we are seeing worldwide. previously, they said it wasn't a sale -- just two weeks ago, the chief executive saying not for sale. dampening that expectation when he released those numbers. he said we are not running a sales trust us. two weeks later they are bought with the full directing of the board. why is it a good deal? because profits have been under pressure before. we saw in those two weeks profit down 4.5%. andolidation is the trend japan getting out there and snapping up u.k. companies. jon: very interesting that corporate japan opens its wallet with dollar yen at one point 20 but not 1.80. not 1.80.ut japan opening its wallet finally, does more to anything from here? trillions 100 billion -- multitrillion yen question. we have heard about abenomics and where has the economy gone? it makes perfect sense for a successful japanese company doing very well to look to expand outside japan because the prospects don't really look that much better than they have been over their 20 wasted years before abenomics. jon: is that the story? >> it is also a question of demographics as well. they need to get out of their own market and the asian markets are slowing. looking for insurers and the occidental countries is a perfect strategy. jon: so the idea that more is always the answer. do we move to a point where more is not always the answer? this might be different economic thinking that maybe money needs a price. >> this is where we start to talk about what will happen to global interest rates. we have the whole economy and nowhere mode. but corporate going out and borrowing enormous amount of money -- what have they done? stock buybacks and put money in pension funds. they have not gone and built new factories and created jobs. if you do that, you expect to get a return, but when interest rates are zero, that ensures that returns will be close to 0%. so they are just taking up the boots by sorting out the stock price which is great for ceos. higher stock price, bigger bonus. but when nobody -- when money has no value, nobody bothers to invest. but i don't think that a 20 point basis point fed hike is going to change the ability of alternate doors to go out and entrope. if that is the right word. jon: we are back and 10. ♪ jon: welcome back to "on the move." i am jonathan ferro here in the city of london. here is what the equity market session looks like this morning. the stock 600 pushing higher. the ftse 100 up by 1.08%. by -- the to 25 down nikkei 225 down by 2.43%. quicklyp the board there is one currency pair i want to take a look at. euro-dollar, 1.1178. we came close to the 1.1273 we were at just before the ecb president mario draghi started speaking. that plunge the most completely erased the euro rally at the beginning of this week. healed, we10 year will be talking about german bonds in a moment. down 3.3%.ti crude a lot of market moves to talk about and stock moves. that deal coming over from corporate japan to snap up amblin to the tune of a 36% rhenium snatching 3.5 billion pounds. -- premium snatching 3.5 billion group and the independent companies that can be seen as a potential target getting in from this massive deal coming over from japan. let's have a look at some of the downward falling. there are not many today. every single energy group trading higher but whitbread have disappointed. there like for like sales not doing so well. up 4.3% buttually the estimate had been for 5.2%. -- pulling back on their expansion plans. the worst performer is french tv . the finance minister waving in and driving down from the chair. performer,he worst down by 6%. based on a consideration of the french government to reintroduce state-owned ads. what would that do for the finances of those currently held by the public shares? that would be the dampening effect on the nonstate owned coveney today. -- nonstate owned company today. germany'sis ahead of draft budget do to be announced and under half an hour. hans nichols has more. the trade data out of germany -- talk to me about that. pretty resilient. hans: it is remarkably resilient. it came in 2.4% higher. imports at 2.2% higher. it wasn't like the german economy was all export driven but they outpaced imports. that gets you to a trade in balance of 25 billion euros for the year. the expectation was 23.5 billion. germany is figuring out countries to export to in a soft july environment. it was soft because of the greece capital controls but it does not look like it affected germany. ago we had quantitative easing but now it looks like germany is the biggest beneficiary of all of this. one thing that we are seeing in germany -- they were costs are increasing, up 3.2%. long-term, it will be hard to remain this competitive with their exports if labor costs continue to rise. we see a side of that story where they try to tempt down their labor costs. it's pretty competitive, but how much longer will it last? jon: the draft budget we are there is a budget that german people would like to see and the rest of europe would like to see. i'm guessing that we get the former and not the letter. hans: we get something that is very balanced. mr. schaeuble and madam merkel have been very clear that they want a balanced budget. they will have to have some contingency spending for refugees. the number for 2016 is an additional $6 billion at the federal level. in germany it doesn't have the same tom at circumstance as a budget day in the u.k.. it will still give an indication of where the priorities are. for the german economy that feels like it has weathered a lot of economic storms but now has this refugee crisis that it has to reconcile. jon: thank you for breaking that down. let's welcome back bill blaine, reimagining the german budget that they will get and what the german people want that the rest of the eurozone once. is this going to be considered among the economic historians is one of the greatest missed opportunities for the german economy? >> that is an interesting question. if -- should they go out and borrow loads of money and build loads of infrastructure. jon: that they need. >> they have a better trade system then some countries i know, but it will be very interesting. the whole story in europe is beginning to get better. we are seeing signs of growth and then it gets fascinating. you have wage pressures beginning to develop. and her member that inflation is not a bad thing anymore. everyone loves inflation. we are going to get to a situation where the german economy is clearly the leader and that raises the question while the rest of europe is dragging itself out in the mud, germany is already up and operating and the germans will be calling for european rate hikes. would be problem which a good problem to have. even as close as one years's time. >> it is an argument that will be had. >> the real question for the rest of europe is, how can they catch up with the german experience. there is still a lot to be done in terms of improving productivity. these are economies learning to use some of the else's currency. some economies like spain and lower marks like to france and italy. jon: before the break we were talking about putting a price on money with japan and weak japanese gdp. in europe we're talking about doing more with the ecb. we have a point of diminishing returns. qe?his is a question about what is the effect of qe? by helping markets distort and survive external shocks, i think the view that people are coming to an china is that it is an external shock that causes a lot of sentiment shift but step back and analyze just how bad it really is for the economy. toarly, you would expect it impact germany most because germany exports price and sensitive cars and heavy engineering machines and things like that. we are not expecting that big an impact from china. china will continue to do what china does and overtime it will realize that the knock on effects are lower, in which case we can get back to the key business which is tracing growth in europe. draghi needs to be less worried about doing anything. what he did last week was promised to do things and the man is an acknowledged expert on promising to do the right thing. jon: to wrap the conversation up, we spent the last half an hour having a foot down, macro discussion. market volatility has pushed spreads wider. in your world, are things functioning as normal? are theyfund deals, going through with these? >> it is incredible what is going on. you still have investors with cash to invest but we talk about a massive liquidity problem. i don't think that is because investment banks have stopped making markets. we are into a period of evolution in the way that fixed income markets are traded. we are seeing the emergence of a new brokerage sector but also trading platforms. the problem is that there are so many. once that evolves to a few effective platforms liquidity will not be an issue. but for investors, why would you buy the same way you did 10 years ago when you need to buy a bond that is on some kind of index so you can show you are outperforming. there are much better investments beginning to emerge as we see the developments of what we call the alternative asset classes. this was the area that used to be purely the reserve of the banks. they would be lending money to property developers and aircraft manufacturers or airlines to fund aircraft. to mortgages -- whatever. it was all done through banks. now we are seeing new lenders emerge and this is where the alternative asset markets get interesting. you see the direct financing of companies, insurance firms, pension funds and real money accounts. that will be the most interesting market and it is very much one we are involved in. jon: there is the plug. the question that i would raise, if i was a big institutional player, do they have to scale to the liquidity that i need? jon: they don't generally have the scale. becoming a much larger market and is certainly a way to enhance returns. jon: fascinating stuff. your slowdown, your problem. china's deceleration will take its toll. find out why after the break. jon: 44 minutes past the hour. the japanese insurer has made a 670 pence per share offer to rival amlin. the stock is soaring today. exports fell by 6.1% as we heard earlier. at $57.8 trade surplus billion. the japanese economy contracted less than initially estimated. gdp shrank 1.3 percent compared to estimates of 1.8%. 2.4% lowere to erasing all of the gains for 2015. pressure against the world's second-largest economy. says theew eu report economic slowdown might be permanent foreign businesses welcome the talk of reform two years ago but the chamber says at the moment the momentum is lost. like it is one step forward and one step back. the problem we have in business right now is the messaging from the central government. too many conflicting messages. hashrough this turmoil, reform momentum been lost? >> i would say so. there must be so much pushback in the system that there is resistance building up in the system. slowdown feel that a is the right time to implement reform? >> why waste a crisis? it is the best time in order to make these changes, but it is painful. if theblem is that slowdown will basically derail the reform, that is the wrong take. we would say that the slowdown is a warning shot, don't kick the can down the road. take it straight away and do the reforms now. we cannot wait. >> what are your members saying about progress in market access. >> slight improvement in some area's in closing down others. in the old days it was like strong growth in the market economy. we never had rear closing. there still seems to be a bit of fear of having a competitive landscape across the board. the problem cannot be solved by putting in more money into the economy. we have 800 recommendations in this book that helps the government contemplate where to move faster. >> how many of them are they going to heed? >> we can talk next year. >> the new toolbox -- accelerated reform. you say that is not happening. limiting state owned enterprises in the economy -- that happening. increasing market access -- mixed bag. committing to rule of law -- that is a sticking point. >> it is the biggest driver of growth according to our members. we see laws coming out that raise? race and geo's 4 -- that question marks, ngo's for example. what is the security issue in the economy. thatule of law also means environmental laws are very good in china and not being jinemented and such as jin we have very good chemicals but the implementation is basically nonexistent because of corruption. jon: the slowdown in china may have taken global markets for a wild ride but will not be enough to destabilize the world's biggest economy. that is according to jpmorgan, goldman sachs and deutsche bank. even if they slowed by one full percentage point, economies should not be too concerned. let's bring in simon kennedy. a doom and gloom scenario for china but not the developed world. why not? >> to quote the big guns of offstreet -- there are offsets for the bad things -- the big guns of wall street, there are offsets for the bad things. the slowdown in china is generating lower commodity prices and is moving capital out to elsewhere. there are positives from the slowdown. altogether, jpmorgan and goldman sachs say when they look at the u.s. and europe, they should be ok and should not be affected. jon: i wonder how they add this up and how you appreciate the feedback loop. -- it may notline but then -- growth growth potential comes down? >> the big caveat is what happens to the emerging world? the u.s. might be ok. if china is slowing it means russia, mexico and brazil and the other emerging market countries enter a tailspin and at that point all bets are off. the thinking is that the u.s. gets a bite of the growth. jon: thank you for joining us this morning. the chief international economics correspondent here at bloomberg. up next -- everything to watch for the rest of the day. we will break down what to look out for after the break. ♪ seems torn between two schools of thought. openials want a more market driven system but the wild swings that came with that are frayed nerves in beijing leaving them to a scattergun policy approach. tellso, the apologist manus cranny that the program has worked to an extent. that have seen expectations of a hard landing in china are overblown. pictureoment, our big bottom line is we do not see a property-led hard landing in china. the risks at the start of this year and the ones facing the economy now are putting much the same. equity markets have basically inflated. say thatu would also the equity market rout is manageable. it will not contaminate the rest of the economy to the extent of the hike. >> there may be some spillover, but not to the extent the height is making it out to be. the equity market impact plays a marginal downside risk. is fundamentally, the risk much less and the impact should be more manageable. manus: give me the numbers because the propulsion of the equity market experience in china versus america. equity the impact on the market through consumption, households at the moment only a tiny portion of their overall health. that is in contrast to more than 40% of their wealth which is invested in property. the situation is much more different with the u.s.. on that example, with regard to poses, onlye share of new monthly credit to the chinese economy comes from the equity market. that is sharp contrast to the almost 60% that comes from bank loans. jon: manus cranny brought us the interview and i am pleased to say he joins us from his long weekend away. what have you got? manus: a lovely weekend, thank you very much. more of china. rio tinto does not seem to think it is bad as we all make it out to be. donna was levelheaded in her approach when i caught up with her. but china is front and center and another bad set of numbers. what does it mean? we have johnny coming in from access to discuss those. the other issue, it is not a global issue, centered on what europe is doing with the refugee crisis. bonito -- emma bonino, the former italian foreign minister. europe's response to the juncker plan. hour we have a hedge fund manager and his perspective is always great to get in terms of the world. lgebris actually sees the world and his domain is banks. will bringthe brink you that first draft of the german budget as well. germany's response to the refugee crisis maybe riced into that budget. warren buffett will join us live from new york at 5:00 p.m. london time a lot going on in the markets. the ftse 100 just off a session high. the dax at 170 points higher. that is it from me. good luck from the rest of your day. ♪ francine: more evidence the world seconds which -- second-largest economy as imports and exports fall in august. thes: gdp shrank 1.2% in second quarter. francine: as the refugee crisis deepens, we speak to the former -- director of humanitarian aid on what can be done. welcome to "the pulse" live in

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